Chapter 7

_____ are revenues minus expenditures.

Profits

The main goal of the _____ process is to produce a cost baseline for measuring project performance and project funding requirements.

Cost budgeting

_____ involves allocating the overall cost estimate to individual work items to establish a baseline for measuring performance

Determining the budget

Newtech Inc. hires John for the position of a software programmer to work on their new project. Salary paid to John by Newtech Inc. would be an example of _____ costs.

Direct

Analogous estimates are called activity-based costing.

False

Budgetary estimates are made even before a project is officially started.

False

If the cost performance index (CPI) is less than 100 percent, the project is under budget.

False

The primary output of the planning cost management process is a change request.

False, should be cost management plan

A cost management plan can include organizational procedures links, control thresholds, and process descriptions.

True

Definitive estimates are made one year or less prior to project completion.

True

If an important supplier goes out of business, management reserves can be set aside to cover the resulting costs.

True

In a bottom-up estimate, the size of the individual work items is one of the factors that drives the accuracy of the estimates.

True

Parametric models are reliable when the models are flexible in terms of the project's size.

True

Project cost estimates are allocated to work items which are based on the activities in the _____ for the project.

WBS

One of the main outputs of the _____ process is a cost baseline.

cost budgeting

Work performance information and cost forecasts are main outputs of the _____ process.

cost control

A _____ estimate is used for making many purchasing decisions for which accurate estimates are required and for estimating final project costs.

definitive

If the cost estimate for a project is a basis for contract awards and performance reporting, it should be a(n) _____ estimate and as accurate as possible.

definitive

Which of the following involves developing an approximation of the costs of resources needed to complete a project?

estimating costs

A negative schedule variance means that it took less than planned to perform the work.

false

_____ helps develop an accurate projection of a project's financial expenses and benefits.

life cycle costing

The process of controlling costs primarily involves:

managing changes to the project budget

The budget is one of the three values of earned value management and is also known as _____.

planned value

Profits may be defined as:

revenues minus expenditures

Schedule variance is:

the earned value minus the planned value

Which of the following is true of tangible costs?

they can be easily measured

Analogous estimates are also known as _____ estimates.

top-down

Which of the following is an input of the process of controlling costs?

work performance data

It is important for project managers to understand that every cost estimate is unique.

True

Good Earth, a company manufacturing packaged food products, sets up its stores in Baltonia. However, a year later, the company closed the store down due to high operating costs. In such a scenario, the money spent in paying for the rent of the store in Baltonia would be an example of _____ costs.

sunk